SYDNEY - Demand for credit in Australia has increased as Christmas approaches but consumers are favouring personal loans ahead of credit cards.
A nationwide credit survey by Baycorp Advantage estimated a 2.2 per cent rise in all credit applications in the October to December quarter, compared with the same time
last year.
However, the projected number of personal loan applications jumped to 483,488 applications in the quarter, up 20 per cent from last year.
This compares with a 7 per cent fall in credit card applications to 708,566 for the same period.
Baycorp Advantage managing director Andrew Want said consumers still had high levels of confidence, unemployment remained low and business confidence appeared to be holding up at relatively high levels.
"The figures show that there is no slowing in the volume of borrowings being sought by Australians, only an increase in the preference for personal loans," he said.
"We are seeing [an emergence of] a trend towards personal loans in consumer lending and away from credit cards."
Mr Want said while the figures showed a shift towards personal loans, a high level of motor vehicle sales in the month of October might have skewed the results.
Overall, he said, consumer credit inquiries were continuing to increase but at a slowing rate, which was consistent with the national accounts data.
The release of the survey coincided with the a warning from Australia's investment regulator yesterday that consumers should manage their credit cards and budget carefully or face a "painful financial hangover".
The Australian Securities and Investments Commission said Australians owed more than A$27.9 billion ($30 billion) on credit cards alone, which was usually the most expensive way of borrowing money.
"Getting into debt is far easier than getting out of it," said ASIC's executive director of consumer protection and international relations, Greg Tanzer.
The Baycorp survey also showed consumer credit was highest amongst those living in the inner city and consumers in the 25-to-34-year-old age group were the most active in seeking credit.
- AAP
